Answering a question on how his administration would lift the US birthrate, he said it was “looking at programs. There’s a certain Australian plan that people are liking, and they’re talking about … not for children, necessarily, but it’s for people, working people.”
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He later clarified that this was our superannuation system.
Trump has clearly picked up on the positive remarks of others such as BlackRock founder Larry Fink, somewhat like a godfather of investment firms and a financial influencer in the US with $US13 trillion in assets under management, who praised the Australian super model that has contributed to the population having more retirement savings per capita than people in any other country in the world.
In a letter to his shareholders, Fink commented that our 30-year-plus system, which is unique in the world, is delivering unprecedented levels of savings for Australians approaching retirement and has played a key role in the development of a much more sophisticated domestic capital market.
Trump could be impressed by the disproportionate size of Australia’s $4.3 trillion superannuation pool and even more impressed at how much pressure it takes off the government’s need to finance retirement incomes. But the mechanics of implementing such a scheme in the US would be near impossible.
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Enforcing contributions from workers and employers runs counter to the less prescriptive industrial relations laws in the US. Contribution to pensions (called 401k) during the lifetimes of US workers is currently voluntary, rather than compulsory as it is here in Australia.
Clearly Trump wasn’t across the detail of Australia’s superannuation model, but he may have gained a positive impression from US Treasury Secretary Scott Bessent, who attended a special superannuation summit in February at the Australian embassy in Washington, where he said he was impressed by the reliable growth of Australia’s pension funds.
And Trump wanting to mimic a model viewed by many as the gold standard is unsurprising.
Standing next to Michael and Susan Dell as they announced their generous contribution to the children of America is equally unsurprising. The halo effect of that would appeal to the president.
Money in Trump Accounts must be invested in an index fund, which tracks the overall stock market, his administration’s policy states.
“Trump Accounts will be the first – I guess you could say – first real trust funds for every American child, allowing family members, employers, corporations, generous donors to contribute money that will be invested and grow,” Trump said in a White House press conference on Tuesday, after the announcement of the Dells’ pledge.
He continued: “An investment’s gonna be made, that investment’s gonna continue to grow – we hope, right, we hope. But it will.”
Maybe that’s what his scheme has in common with Australia’s superannuation – they are both tax-effective investments that are inaccessible until a prescribed time. Australians can get their super on retirement, while Trump Accounts can be accessed when children turn 18.
Whether either has the effect of promoting population growth is anyone’s guess.
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